July 8,2025
RED FM News Desk
Toronto, Ontario-Toronto narrowly avoided a potential loss of around $2.5 million due to an electricity fraud scheme that involved unauthorized contracts signed with third-party energy companies using the stolen credentials of a retired city employee.
According to a report release by the Auditor General (AG) on June 21, the fraud was discovered in October 2019 during a review of suspicious electricity invoices. It was found that in July 2019 electricity accounts for 14 city properties had been transferred from Toronto Hydro to third-party energy retailers without the city’s permission.
“The two energy retailer contracts had an estimated total value of $4.2 million, of which $2.5 million represented what would have been lost by the City had the unusual invoices not been identified. This estimated potential loss was based on the difference between what the City would have paid Toronto Hydro versus what would have been paid to the energy retailers over the term of the contract” the report reads
The AG’s investigation revealed that:
- The contracts were signed after the employee had already retired.
- That employee did not have the financial authority to approve such deals, even while employed.
- The fraudsters used the retired employee’s credentials to carry out the scheme, although the person did not personally sign any contracts.
After the fraud was discovered, the city directed the energy retailers to return all accounts to Toronto Hydro, and a total of $250,000 that had already been paid (between July 2019 and January 2020) was reimbursed to the city.
The AG’s report also highlights how Ontario’s energy market allows customers — including municipalities — to buy electricity from either licensed retailers or the local utility. It notes that consulting firms are often paid commissions by retailers for bringing in new clients, and that these firms may have played a role in this case, though their involvement has not been confirmed.
The consulting firms have not yet been identified, and it remains unclear whether any current city employees were involved.
The case has been referred to the Toronto Police to determine if criminal charges are warranted. Meanwhile, the Auditor General is recommending that the City Manager share the findings with other municipal agencies to promote greater caution and oversight when reviewing and approving electricity invoices.
The report is scheduled to be presented to the audit committee on Friday.
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